 Okay, everybody. Good afternoon. I'm Jose Sheffi. I'm the director of the Center for Transportation Logistics. If you don't know who I am, you don't belong here. Anyway, this event is the event that opens our celebration for the 50th anniversary of the Center for Transportation Logistics at MIT. The Center was founded in 1973, which is an interesting year because it's the first year that FedEx started operation. April 1973, FedEx started the start operation with a few Falcon airplanes that don't have the same capacity as today's 777 that they're using. It's a very small, what you might call, executive plane. Today, however, the company has close to 700 airplanes. That's about close to $100 billion a year. That's over 16 million packages a day. But even the first day, they ran 128 packages, a little growth since then. I'm very, very excited to have Fred Smith here. Even in this crowd, no, Fred is a legend in our field because the person did not only start a company, he changed everything in transportation, in logistics. He started an industry more than a company. Everything, some of you think that there was always the case that you could get, you know, a packet next day. Most of the people here think that this is the case. It's not. There was nothing like this before. There was nothing like absolutely positively had to be there by 10.30 the next morning. It was all news to everybody, tracking a package who even thought about tracking packages. The number of firsts that FedEx has done is just things that we all take for granted today. And they are, of course, working on the next level, the next set of innovations with some of it we hope to hear about today. But please join me in welcoming Fred Smith to MIT. So we'll start with some questions about the innovations. We're looking the last 50 years, maybe not 50 years, but a few years. I mentioned some of the past innovation. Could you talk to us about what is FedEx working on today? What are the innovations that the company is engaging? Yeah. Well, I'll be glad to do so. First, let me express again my appreciation for you having me up here at my age. And I have a fairly strict criteria on when I accept trips and visits and speaking engagement. One, that it's strategically important for FedEx. Two, that it can get FedEx a lot of additional business. Or three, I get asked by someone who I can't say no to that I have such respect for. So I'm here because all three of those boxes were checked when Yoshi sent me the request to come up here. This is one of the great institutions and certainly the leader in the logistics field. So I believe you sent me the note and I probably replied either that day or the next day. Absolutely, the same day required. Well, as the professor said, we've had a lot of innovations at FedEx over the years. The reason is pretty simple. If you're in business and you don't innovate, you're in the process of commoditization or extinction. So we invented package tracking, as you probably know, prior to the FedEx package tracking capability, that was not possible in supply chains. You just put something in and hope it came out the other end someplace sometime. And to do that, we had to invent all kinds of things like a numerically sequential multi-part air bill. There had been barcodes that said I'm a can of tomato soup, but nobody had ever made a five-part air bill that had a number that said I'm one, two, three, four, five, and then stick it on the package. And then we tried to have a little device that could read it, started off as about the size of a bread box. That don't really, we worked and worked. We got down to about the size of my glasses here. And then we had a data link into the truck in one thing or another. And before you knew it, we could track a package. And while that was so profound in the logistics world, as all of you know, because you're students of it or knowledgeable of it, warehouse has really no value added, it's a place to put something so you know you got it in simplest terms. And once we were able to track it, then you could basically have the equivalent of a warehouse in motion. To make a difference whether it was in a FedEx plane going 500 miles an hour or FedEx truck going 50 miles an hour, you knew where your inventory was. And that became increasingly important for mission critical type items that were being generated by this rapidly automating society. Then in the 90s, we were really the first practical use of the internet for tracking packages. And I had a CIO at the time, and he had just been up at the University of Illinois and met Mark Andreessen and said they're doing the damnedest thing up there with this mosaic thing. And one of my old partners had gone out to take over Netscape, Jim Barksdale, who's such a wonderful guy. He came back on the FedEx board later on and we had been buying goodness gracious. I don't know how many PCs to give to our big customers to put in their shipping rooms. I mean, it would have broken us and then the internet came along and saved us, right? So we could just send the information out. So there are a lot of other ones in between, but those are just a couple I thought you would relate to. Now, today, I think the most important thing that we have underway in terms of innovation are in the following areas. First and probably most important is AIML. We established several years ago a unit called FedEx DataWork. And I believe, and we'll see here in the next couple of years, that our capabilities in that regard are going to change enormously how we operate and give great value to our customers. And we now have customers who are essentially buying just our digital services, not our transportation services. It's nascent, but it's going to be a very big deal. The second is what would be commonly called Internet of Things. And we developed a proprietary technology called SenseAware. It's Bluetooth that you put on a package and if you had it in this room, if every one of you had a SenseAware on it and we had a little reader up in the top of this room, we could go get any one of you individually. RFID is very useful too, but marrying that SenseAware Bluetooth and the RFID, I think you'll go to the next step of custodial control, but even more importantly in supply change. You'll be able, since we can find which one of these things is you, we'll be able to intervene and solve problems on the fly. We delivered about half of the vaccines that we're very proud of and UPS the other half. Each one of those vaccine boxes had a SenseAware device on it. So with our nascent AIML, we've come a long way in the last couple of years on that, we could predict the problems. In fact, the first vaccine delivered was here in Boston, by the way. It was from Grand Rapids to the hospital here. So we would know based on our predictive analytics that there was going to be a snow problem in Boston and we'd send a note to the hospital. So we may be two hours late, but it's only because of the snow. We're on the way. So I think AIML and internet of things and then in transportation logistics in particular, I think robotics are going to be a bigger and bigger deal. And we have lots of initiatives in terms of loading, unloading trucks. Most of our facilities are already automated. It's the loading and the unloading of the truck that are the big deal. And I think despite the recent skepticism about all the money that's been put into autonomous vehicles, the one area where it will be very successful is over the road transport. And I think that's on the horizon. So those are just a few areas of innovation that we're working on there. Maybe some others will come to me and I'll mention them later, perhaps. Thank you. Let me ask one more question that many of the questions were got from students and faculty. Your competitors, direct competitors like UPS, DHL, USPS and now Amazon. How do you look at Amazon as a competitor? Well, this is a fairly long-winded answer. So I'll try to net it down. I gave the long-winded version of this with your team and I hope that gave you some insight into it. We don't look at Amazon as a direct competitor. We run networks and all of you who know how networks exist, you have to have switches or hubs. And our systems, FedEx Express has 15 global hubs. I can't even bring it to mind, you know, 1,500 stations. FedEx Ground has almost 50 ginormous hubs and another 100 regional hubs and another 500 facilities. FedEx Rates is the biggest LTL carrier in the country. I think it has something like 60 hubs, 370 operating centers. So if you want to put something through the FedEx system as we did the vaccines, we can pick up at any place virtually in the world and we can move it through that network or network and deliver it to any address in the world. That's what we do. We're a system of networks. And if you're interested in that, go on FedEx's investor, FedEx.com, go to Investors, a little 22-minute video I did in June 29th that talks about these networks. So Amazon does not have any such networks. Amazon didn't deliver any vaccines. It wasn't because vaccines are not a wonderful company. They simply don't have networks to do it. The only real peer competitor to us is UPS. DHL is very strong overseas, but they're not strong in the United States. And the postal service is involved in the package business, but generally for very lightweight stuff that goes along with the mail. There's their exceptions to that, which is hard for them to deal with, but they still promote it or try to get more of that business. I think that's going to be a real challenge. But to Amazon itself, Amazon is a retailer. And at the end of the day, their major competitor is not FedEx. Their major competitor is Walmart, Target, Home Depot, Lowe's, Dick's Sporting Goods, Best Buy, whatever you want. And their delivery and transport systems, including their airplanes, are not systems like I just described that FedEx or UPS have. They are designed to move, in the case of the airplane, slow-moving inventory. That is held in a small number of distribution centers and move them cross-country so that you can get them in two business days, which is how they sort of brought people into the e-commerce universe to begin with. So I gave the example with the team that we were just talking to, that you matriculate out to the West Coast and you have to have some MIT coasters for your bar. Where some Stanford graduate just has to have some for their bar here in Boston. So there are no Stanford coasters in Boston, I would be willing to bet. There's no inventory of them. And vice versa for MIT coasters in the Bay Area. So what Amazon does is they just keep the coasters near the campus store of MIT and the campus store of Stanford and you order one and they fly it across the country and they deliver it to you in two business days. Their whole system is designed around that, not a series of hub and spoke. And it operates in a completely different circadian or cycle than we do. They also do their local delivery and then they use the postal service. And about 12% of UPS's revenue comes from Amazon. We on the other side of the coin are allied directly with Target, Walmart, Best Buy, Lowe's, Dick's Sporting is the ones I just mentioned to you. My guess is, I don't know this factually, but I'm directly right. My guess is we do 80 to 90% of all their deliveries. And their e-commerce and efforts over the last few years are mostly delivering high turn SKUs from their stores. So it's a very short delivery as opposed to the much longer delivery of Amazon. So Amazon decided to vertically integrate and they do, I think I'm right on this, about 70% of all their B to C deliveries to your home. And use the postal service and UPS and to some degree some of these smaller regional carriers. So we have a lot of respect for Amazon, but we don't look at them as a peer competitor. And I'm sure they don't look at us as a peer competitor because they're essentially a retailer who makes the vast majority of their money from selling you things and taking a margin on that. And they don't have network that sell things from every point to every point the way we do. Thank you Fred. Let me change a little bit from talking about FedEx. You are one of the prominent business leaders in the United States, in the world. Looking back, say 20 years ago, what you find most surprising about the industry today as opposed to 20, 30 years ago? About the industry today? The supply chain logistics, transportation, because then I'll ask you, what are you most optimistic about the next few years? Well, I think the biggest change in the last 20 years and one that is an enormous personal disappointment to me is the China situation. We've been in China a long time. I was the chairman of the US China Business Council that pushed very hard for them to get into the WTO to get most favorite nation status. And shortly after that, it was clear that they were going to not be quite as market oriented as we had hoped and a lot of other people had and that they were going to go down more of a state directed mercantilist path. In fact, after having performed the duties as chairman of the China Business Council, it was sort of ironic that one of the first things they did in that regard was to pass a law which was specifically injurious to FedEx and it basically was in contravention of what they had agreed to in the WTO. It for all intents and purposes, saved a slice of the logistics chain for Chinese indigenous carriers inside China. I think it was like three pounds and below or something that wasn't permitted under the WTO postal monopolies were but not not packages. So they changed the law. They took us out from the the transportation ministry and put us under the postal ministry, which is you talk about a fox garden henhouse like a land garden butcher shop. So so we had to go through a big fight. You read about it in Hillary Clinton's book when she was Secretary of State, President Bush talked to him about it, President Obama. So eventually they gave us the licenses for domestic transportation. But after seeing the the sort of bloodbath that was going on in the domestic market, we have a domestic capability in China. But it's really related to the multinationals and the B2B space. And we sort of have an alliance with the China Post. We're the biggest transporter by air of things to and from China. And in fact, we have an enormous hub in Guangzhou where we take third country stuff through China and move it one to the other. So we have this legacy position in China. I mentioned to you that Zhang Xiamen actually hosted the FedEx board in his office in 1997. You couldn't get an American or European company and Xi Jinping's office for all the tea in China. By the way, Zhang Xiamen loved Elvis. He had a great voice and he loved to sing Elvis song. I introduced him at the Waldorf and said that to everybody. And they were sort of looking skeptical to which then Zhang Xiamen piped out Elvis song. He had a great voice. So anyway, from those times, the WTO in 2000 and then the postal thing. And we had the great financial crisis. And after that, the position of China changed greatly. I mean, they were overtly mercantilist after that. They announced a number of things where they were going to to use the power of the state. And then as time has gone on, it's become more and more the case. And so now you've had the United States, both with Trump and Biden, push away from TPP, which we strongly advocated because it was useful as a counterpoint to the rise of mercantilism in China. So it's been very disappointing. And I think that it has become, as you well know, you'll see the workshop of the world, the manufacturing place of the world. So to see all of those things now being into question and people talking about reshoring and what can we do to diversify away from China? And all of the sort of things that have come from that, the Chips Act, the U.S. Mercantilism now to fund our chip industry here and the Europeans and all of the embargoed commodities in and out of China and the Taiwan rhetoric. Now, maybe it's foolish of me to say this and hope brings eternal. As most of the people who follow this know, there's been a big change here just in the last few months. Hugh Lee over at Davos said, we're open for business. We're not going to stop you. But that's a big change. But I think that there's too much water under the dam now with people looking at alternative supply chains and and so forth, which I know many of you are studying and very, very familiar with. So that's got to be the biggest thing. I mean, it's rare that you have an economy that is not a participant in the world economy and market economy at one point. Some are big people that come in and then all of a sudden they change the game. That's got to me to be the biggest thing in the last 20 years. Building in on this. So how do you see globalization in general developing? Look, it is clear when you started the for 20, 30, 40 last year of globalization, you know, brought more people out of poverty and increased standard living around the world, especially in China by hundreds of millions, hundreds of millions and around the world. Yes. We are moving away from this. Are we? Well, where are we heading here? You know, if you look at the history of trade, obviously the mercantilists or the protectionists have been ascending at some point in time in the United States. That sort of fuel by the populist, you know, my job went to China. Certainly some of that's true. But the United States has neither the culture nor the wage expectations that would permit us to really make a lot of t-shirts here or toys or most of the furniture. A lot more jobs have been lost here because of automation and because of China. But it became, you know, the political theme that really was the biggest thing in Trump's ascendancy. And now that it is such a big deal, the left on the other side organized labor is against free trade. But these things happen episodially. And I think the the benefits of trade are so clear over so many years. You got to remember, you know, it was Roosevelt and Hull, a Democrat. Cordell Hull, the Secretary of State, who passed the the Trade Act of 1934, because it was clear by that point that a very big part of the depression that had consumed American and most of the world was because of protectionism, the Smoot Holly Act, who were two Republicans, by the way, people forget. So so Hull spent the rest of his life and particularly after World War Two, trying to push for the UN, the IMF, the World Bank. And he tried to get a global trading organization in. It was too tough. And so they had nine rounds of what they called GATT, General Agreement on Trade and Terrorists. We opened up our markets. A lot of them were a lot of our rationale was to get preferences and help Germany and Japan, who became allies against the Cold War enemies of Russia and the Communist China. So by the time, you know, the period we're talking about by, you know, the financial crisis, every American family was benefiting some place to the tune of almost $12,000 with higher standard living because of lower lower cost imports. And if you think protectionism works, then go to Brazil. I mean, as Clemenceau or somebody famously said in the early part of the 20th century, Brazil is the country of the future. And it always will be. And we have a big operation in Brazil and we love Brazil. And their airplane manufacturer, Embraer, is world class, but they are protectionist. And because of that, they continue to have a hard time lifting people out of poverty, but the politics of the place, particularly now going back to the left with Lula, it's going to be hard for them to to embrace any kind of open trade. So we at FedEx and me personally are going to the extent we can continue to push the benefits and point out the absurdity of some of the protectionists. And my favorite protectionist story came apocryphally, perhaps, from the famous French economist, Frederick Bastiat in the 1830s, and they had the same problem. And he said, we want to be exporters. We want to sell a lot of stuff and employ all these French people. We've got to sell a lot of stuff overseas. Well, how do you pay for them? And are you willing to buy something that? No, we're not willing to do that. So he came up with a very funny, satirical little suggestion that they were going to go. He recommended France going to shipbuilding business, build every damn ship that they could possibly build, take all the goods that they manufactured, put them on the ship, sail them out 20 miles and sink them. You've got perfect situation, you know, the exports were manifold and you didn't have to worry about these pesky imports that came from people you didn't like. Well, of course, that's nuts. So, so to get to your point, I think they're saying ebbs and flows, but at the end of the day, particularly with today's telecommunications and transportation, the earliest histories of humankind show that there's an innate desire to travel and trade. I mean, the amphora is on the bottom of the Mediterranean, the silk route, the Marco Polo, that's what they were doing. So I think at a certain point in time, maybe some of the stuff is coming from Vietnam or Columbia or wherever the case may be, but I believe that there's just too much impetus that globalization will go back to pre-smooth hauling. I hope it will come soon. Well, I hope it will come soon, too. I'm sure. Changing tact again, FedEx invests a lot in sustainability. Yes. And by and large, we think about sustainability as a topic that everybody's interested, everybody agrees upon, until they have to pay for it. Yeah. Then it kind of dies down. Where are we going there? Well, fortunately in FedEx, we've got a fairly easy decision path on that because we are so energy-intensive. I mean, you use fossil fuels to fly our 700 planes and 200,000 trucks, although we are a heavy adopter of electric pickup and delivery vehicles, particularly the new BrightDrop EV600, which we help, in some respects, for General Motors BrightDrop Division to design it. That's sort of the sweet spot of a battery technology. I mean, cars don't really match up without the subsidies and the Tesla Semi not withstanding, they haven't gotten battery semi trucks, but pickup and delivery vehicles, it is really very accretive, lower cost, you can make the case for them. So we've made the commitment to go all electric, I think about 20, 35 in our pickup and delivery vans, and in California, we have hundreds of these BrightDrops, I'm gonna go see one week after next, one of our stations out there. In our planes, they burn a lot of fuel, and so we have good positive ROI and that, and we're doing all the other things that everybody else is, we have long supported and advocated for a carbon tax. We believe that Professor Nordaus of Yale, Maum, a model was correct, that that's the way to solve the problems, there's been no political will to do that. Then you've got price in the market allocating these sorts of things. So I agree with you, everybody says, well, buy American, buy American, and Wal-Mart's tried this over and over again, they say, all right, here's a buy American t-shirt, it's $12.50, here's another t-shirt for 9.50, you know, the 12.50s stay on the shelf, the 9.50s. The market rules, and there are some examples to the contrary, we were talking about it many ago, we have a carbon calculator, so we're gonna be able to show and tell people if you need this overnight, this is the carbon it takes, if you'll give us three days to deliver it, this is the carbon it takes, so we're gonna see. And we'll share that with you, of course, because if consumers are really that concerned about it, but I'm not sure that that is the case. We also funded a very large endeavor at the Yale School of the Environment, run by just an incredibly abled Dean Ingrid Burke, Dr. Andy Burke. And she and her multidisciplinary scientists are trying to use geological forces and capabilities to naturally sequester carbon to offset all aviation carbon. So we gave them quite a little bit of money over five years, Boeing has come in with us in Southwest, if you're interested in it, you can bring it up the Yale Center for Natural Carbon Capture. So we're doing all kinds of things, and we're doing it for pure economics, but even if it weren't pure economics, our customers won't do business with us if they don't think we're environmentally responsible. That's clear as a bell, particularly the young folks. So I do think that the success the United States has had over the last few years, which has been profound, our carbon missions have almost flat, China's going through the roof, India's looks like an off ramp on a jump jet carrier. So we're actually making a lot of progress in the United States, but whether you can get the rest of the world, which are much bigger pollutants than we are today, as Al Gore wants them to do, I'm dubious about that. Yeah. Maybe last question before I turn, promised we'll have a Q and A with the audience. But the people who are interested in how do you measure the value created, the value creation of supply chain, what kind of metric you use, what kind of financial metrics, what kind of other metrics, asset turns over revenue growth, whatever. What is this? For what I didn't hear the question. For the supply chain. You have to be a part of the supply chain. I'm not talking about the air pipe or the transportation side. How will you measure the value creation in supply chain? You know, I think we're so much more of a provider. We're probably not as expert in that as some of your other customers are. You know, we have a supply chain unit that does third party logistics. We have a solutions group that goes in at no charge and helps people put the least cost or the least carbon or the fastest, whatever their metrics are. And they vary by industry. You know, what it is. I mean, if you're in semiconductors that the huge values per pound, that's one thing. If you're taking defibrillators to Mayo Clinic or Johns Hopkins, that's something else. If you're moving band-aids for CVS and Walgreens. So we have a very expert group, our solutions group that helps people design what we hope are their most efficient supply chains based on the metrics that they give us. And so that's kind of how we do it. We don't go in and try to sell people who need Volkswagen's Cadillac because we've got such a broad product or service portfolio, we really don't care. I mean, we will do what you need and we'll help you depending on what you need to do for the particular product, we can help you do it. We also, as I said, we have a relatively small supply chain group that manages warehouses and so forth. But it's not nearly as big as DHL's and what's the new company that's spun off of XPO. What is it? Okay, yeah. So both of those are huge. I gotta think those are the two big ones. But we do sort of supply chain design which is agnostic to any conclusion that we might have going in but driven by the customer's requirements but using our expertise and information to help them. Okay guys, I promise people to give enough time to ask questions. We have two microphones here and there. If you want to ask a question just stand behind the microphone. Just go stand behind the microphone and you can ask the question. Or if you really sit in the middle, just wave your hand and nothing will happen. I know. By the way, you know what we have for this, talking about an innovation, what we have for sessions like this? We have a little padded cube with a mic in it. You know how you do the, in the football stadium you bounce the ball? Sure, sure, you go there. Yeah, we got a little cube and then just throw them around. It's kind of fun. I'll send you one. Get it, absolutely. Guys, there's some question here. Would you just tell us who you are before you? Okay, so I'm Matthias from the SEM program and I've got one question. You told us that you started to innovate with tracking and you said you continue with active technology with robotics. How did you keep that mindset over the last 50 years to continue to innovate, bring up new ideas, runner? So give me a short version. He knows this, but my hearing is very bad for my service days. Yes, I did not get it. So that's it. Can somebody, can somebody give us a, Chris, have it? Jim. Have you kept the mindset for innovation and for changing? Can you keep the mindset? Oh, the mindset? The mindset to keep innovation. Yeah, that's a very profound question. I mean, the way you have to do it is to do it. I mean, the first thing is, I think above all else is you gotta be able to tolerate characters. I mean, a lot of people come up with really good ideas or, you know, a little strange in certain ways. That's what people thought about me and me. So the first thing, great ideas come from strange places. And so you've gotta tolerate, you know, people that doesn't, you know, hit the cookie cutter mind of a scientist or somebody. You know, so that's the first thing is you gotta encourage it and accept it from wherever it's coming. The second is you gotta tolerate failure. You know, the first time you have a really nifty idea that doesn't work and you, you know, you're not gonna get the second idea of the second project. So the second thing is being able to tolerate failure. I mean, you know, reasonable risk. You don't wanna bet the enterprise, but you've gotta put something into R&D or trying to change things. The people that developed the package tracking business kinda look like the crowd in the bar in the Star Wars movie, you know. They're incredible group of people. I just love them to death that they just did what they did in our AIML group today. There are some real characters in there. And they don't look like me with a blazer and a tie. So that's the second thing. You gotta be willing to, you know, not everything's gonna work and don't kill everybody if it doesn't work. So find the right lights. Don't have any preconceived notions of who they are and tolerate idiosyncrasity and be willing to accept failure. And I think the third thing is just to pound your fist constantly that the failure to change is commoditization at best and more probably extinction. I mean, one of the things I'm most proud about, I remember all these companies that have come and gone over the history of FedEx. Now a lot of them are technological. So it's probably not fair for me to do this, but some microsystems. I mean, they changed the world and Wang and DEC and I could just keep going on and on and all. They've all come and gone, but here we are. You know, we're still standing. Not every year is great. We make some mistake, one thing or another, but somehow we got from that 189 packages to $100 billion because we're very analytical and we do understand you have to change and to change means, particularly in this day and time, to innovate and to innovate in this day and time, it means adoption of leading edge technology. So you just got to work it all the time, all the time. Let me say one other thing. I'll probably maybe surprise you. I get emails from nuts all the time, you know. And most people in my position, it's like send this to the nut response unit. I always reply to them. You know, I mean, if they're even remotely credible. Because I wanna see maybe that's that person that's got that one breakthrough idea. So you just have to work it constantly. Hello, am I audible? Yeah. Go ahead. My name is Anukriti. I'm actually an ex FedEx employee. I'm from the Luxembourg Center. My question is about revenue quality and pricing power in terms of global recession. So we are seeing global recession coming in and we've been hearing FedEx talk about revenue quality and maintaining that pricing power. How, what are the measures that FedEx is taking to do that when global recession is hitting us? So I got about half of that. Can you give me the recap? I got one third. Jim, Chris. I can shorten it and repeat it. What? What'd she say? I'll say it. I'll say it. What, what, what, what, now tell it to me again. Just briefly, just this. My question is about revenue quality when faced with global recession. What is FedEx doing to maintain the revenue quality when faced with global recession? How are we handling the recession? Oh, the recession. Yeah. Thank you. Well, I'm sorry. Well, it's an excellent question. And you said you're a FedEx team member, right? Thanks for keeping the Purple Promise. You know, we appreciate it. It takes everyone of us every day. Well, the first thing, the way we're handling the recession is the way we've always handled every downturn. We have a lot of what I call shock absorbers built in on our cost structure. Our annual incentive compensation, our long-term employment. So the first people that get it on the chin when the volume started going down are the management, particularly the top management. Second, we design our network. So we always have a fair amount of equipment that is written off the books, but we can use it on the upside, but we can put it in the trash on the downside. And the third thing that we have is every year, we have what's called staffing effectiveness. And each one of our units is supposed to look at how they're organized and see if what they're doing in every area is adding value to the enterprise. If it's not, we got to stop doing it. And that means that we have to get reassigned people, become more efficient and so forth. Now, we don't have the same challenges that a lot of the tech companies that do, but there is definitely a slowdown in global trade which is affecting our express unit. But our freight and ground units are doing exceptionally well. So we'll be, we've already done it, taking down flights across the Atlantic, taking flights down across the Pacific, going through staffing effectiveness, the usual suspects, as you would say. But I think that our issues are so relatively small, relative to other people, we'll actually come out on the other side which has been true in most of these downturns stronger. But we're doing all of those things today. Mathias, go ahead. Yes, can you hear me? Yeah. Okay, good. So yeah, I'm Mathias, we just met in the staff meeting earlier and I was surprised by your answer when you were asked about the role of Amazon that you said you don't really see Amazon as a direct competitor. And I understand that from today's point of view, but given what you said about innovation, that you see the strongest frontiers of innovation to be ML and AI robotics and the like, on all of these fronts, Amazon is one of the front runners with probably the deepest pockets in the industry. And I'm wondering, we've seen them become last mile delivery agents. We've seen them start an airline. What would keep them from replicating the hub-and-spoke model that, for instance, FedEx is running? $150 billion. So, if you go to Paris, which is our biggest hub in Europe, we're the largest operator in Paris after Air France. You couldn't duplicate that hub in Paris for all the tea in China. I mean, it wouldn't do anything at every time it's money, yeah. We bought TNT, which has been a very difficult acquisition in part because right after we bought it, Putin fired a cyber weapon that Ukraine and brought the company to its knees along with a lot of others like Merck and MERSC and the healthcare. So, Amazon is capable of doing what Amazon wants to do because they're a prodigious company with a lot of cash flow. But at the end of the day, the purpose of the corporation is to return something for its shareholders. So, the moat around FedEx and UPS in terms of these networks make it a fool's errand to do that. I mean, why would you, I mean, they're just, it makes no sense. So, if they wanted to do it, quite frankly, I think they would have made an acquisition in that space, not where they get a lot of the things that we have. So, I'll just leave it at that. They're a wonderful company. Their e-commerce business did not make money in the first, second, third quarters. We'll see how they did in the fourth quarter. Their AWS is the business. So, if I were running Amazon, I'd wanna know what more I can do on the business that's making a ton of money rather than trying to figure out how to lose more money. Because, and by the way, I have a son who's a football coach and I talk to him all the time. And the main thing he does is he scouts himself and he scouts the opponent, right? So, we scout ourselves and we scout our opponent. So, I'm not whistling past the graveyard. I mean, I understand exactly what Amazon can do and again, have the greatest respect, but they don't have networks like we do and we're not a retailer like they are. So, could they come over and become, you know, DHL three? Of course they could, just like General Motors could if they wanted to or Microsoft could, but the fact that they fly airplanes doesn't mean that they're doing what we're doing. Or the fact that we fly airplanes doesn't mean that we're doing what. This has been one of the biggest misunderstandings for years because from 2016 forward business week put this cover thing on us and said, oh, here comes Amazon. It was written by a guy that had done a, what would you call it, the popular history of the Postal Service. The biggest contract in the history of the United States Postal Service, you know what it was? It was with us. It wasn't mentioned in the book. So, I mean, when you have such top of the wave journalism as that, they sure as hell didn't understand anything about what they were talking about about Amazon and us. So, you have to understand these things at the granular level and then the network thing. So, again, they're a great company, a fantastic retailer, made the e-commerce business. They're allied with UPS. We're allied with Walmart, Target, Home Depot, Lowe's, so forth. So that's kind of the battlefield the way it is today. Ken? Yeah, Ken Cultural, CTL. You mentioned that in terms of autonomous vehicles that the phrase is probably the area where that technology will develop and evolve. Can you say a bit more about that? Do you think, for example, it'll be, you know, dedicated lanes first, where we have a hybrid model with a driver-assisted type model? How do you think it'll evolve over the next 10 years or 20 years? So, the way I heard the question there, you were behind somebody, it's autonomous over-the-road vehicles? Yes. Is that it? Well, as you know, there's been billions and billions of dollars poured into the autonomous vehicle area, Waymo, famously emanating from Google, more recently Two Simple, which is sort of half Chinese, half American, Aurora. There's probably, there's one in Pittsburgh whose name escapes me, he's got a different approach. I think the reality is that mapping and sensors are coming down the curve and the processing capabilities are such that over-the-road highway vehicles can be safely driven. Now, we are driving them every day with Aurora, and I think we may have one or two with Two Simple. Every day, there's never been one delay, there's never been one accident. Now, they're down in Texas where things are flat and the weather generally good. I don't know that I'd want to drive them on the Merritt Parkway up here, you know, out of New York, things like that. But you can kind of see this, the practicality of this coming. The truck driving job, a lot of work's been done on this, probably right here on this campus about the attractiveness of truck driving post deregulation, the real wages of a truck driver today, about half what they were 40 years ago before deregulation. So at the very least, I think you'll see and somebody was giving us there, I was very interested in our talk earlier about human factors in truck. So at the very least, you're gonna, there will be an autopilot in the truck, I mean, where you can sit there and, you know, punch it in and just like in a triple seven. Our triple seven pilots coming Hong Kong and Memphis nonstop, they fly the plane about two minutes. You know, they like to take it off. And then they punch a little button and then they just move a little wheel. The reality is they could be hands-free and the plane can land, taxi it to the gate and shut itself off if they wanna punch that button. But a lot of times they like to land it too, but it's not because they have to. So I just think that that's, there's too much economic benefit, too many sociological pressures to provide the number of drivers that are actually needed for logistics in the country. So we're optimistic about that. I'm not optimistic about any point to any other point personal transportation being autonomous. I think what you'll have is closed circuits. You know, downtown San Francisco, here in Boston Commons, maybe you can get a, you know, an autonomous taxi. But I think just the sheer magnitude of all the processing and machine learning you have to go through to know that, you know, Professor Steffi lives over here and his dog runs out here every day. That's tough. But on the highway, everything's marked the same. I think it's coming. Probably without drivers, if I had to guess, 27. Another, probably another three or four years, but it's really coming along. You had a question there. Hi, my name is Fabricio, I'm from Brazil and thank you for your words about Brazil. I agree 100%. And if you are here celebrating 50 years of innovation in supply chain, Brazil can say that we are also 50 years being the country of the future. And my question for you and for you both is very simple. I've been working with supply chain for the last 10 years in industries and I've been studying with MITx at my country and having access to a lot of important knowledge about supply chain. But it's been really hard for a lot of people to transfer the knowledge from good courses like Roswell is doing with supply chain sustainability and it's been really hard for us to move the knowledge from the universities and make impactful changes in our companies. What advice can you both give us as supply chain professionals, which we didn't have 50 years ago, so we can have more success applying these tools in our business? Well, that's a good question again. And you also heard me say how much I love Brazil. I like Brazil, we've got a big operation there for by the way, for those who you don't know it, it was Brazil that invented the airplane, not the Wright brothers. And they have an airport to prove it. It's Santa Dumas Airport. And I personally went down there years ago to Embraer when it was very nation and flew a bandarante into Santa Dumas Airport and got educated very quick on it, was the Brazilians invented the plane, not the Americans. So don't make the mistake, go down there and brag about the Wright brothers because you'll get into a fight. Now, let me also say that people don't really recognize this but Brazil and the aerospace ecosphere around Embraer, it is world class. They have the finest engineers, it's just world class. So I guess I would have to answer it this way. You can't take a fish out of the sea. And by that I mean you have to have an environment which allows you to do things efficiently and change. And if you don't, you can have all the good intentions in the world. So I was heavily involved as a much younger man in the late 70s in the deregulation of air cargo, air passengers, interstate trucking and rail and then eventually intrastate trucking in 1994 and putting in open skies. The removal of the friction of the regulation of trucking is what led to Walmart target the big box retailers. Absent that, now it was bad for the truck drivers and the truck load industry evolved, Swift, MS carriers, all of them think without that you could never have the efficient retail sector that we have today. So one of the biggest problems that you have in Brazil, if anybody's spending time down there, the states are very powerful. And when you cross state lines, you have all kinds of friction and the tax code in Brazil is mind boggling. I mean, you just have all kinds of non-productive things going on. Now India had the same thing and they recently changed that. So we'll see, they had the same kind of state taxing and crossing border issues. And I would say based on my, not very deep, but I think adequate study of American history, one of the most under remarked things that made the United States, the economic powerhouse it is, is the commerce clause where you couldn't do what they do in Brazil or previously did in it. And there's a famous case about, I can't call the Supreme Court case about ferry services across the Hudson. Had that gone a different way, we probably would be a fraction because we'd be causing you a tariff to come across down to Tennessee and sell us something here from Massachusetts. To me, that's the biggest single thing is in a lot of the developing parts of the world is the friction because of legacy, interest, so forth to keep things from becoming more efficient. One of the biggest reasons China became the economic hegemon that it did is because they were damn ruthless about getting anything out of the way of the growth. I mean, we wanted to move our hub, which at the time it was down in Philippines up to China because the whole economic epicenter of Asia was centering on China. So we selected Guangzhou. In Guangzhou, there was a village over on the eastern side of the airport and we wanted the hub, the only place to put it was on the eastern side of the airport so it could connect easily with Shenzhen and Hong Kong. So our folks told them that, said, well, that's what we need. The village was gone in about one week. Now, we made sure that they treated the people in terms of compensation at all fairly, but it was just unbelievable how fast they cut through the red tape. To this day, unless I'm battling my form, there are a lot of people that are illegally living on the airport at Mumbai. So when you get the friction to commerce, which is sort of the writ large supply chains, it's hard to implement innovations and best in class things. And again, had it not been for deregulation in the United States, this country's GDP would be a fraction of what it is today. And in particular, the retailing sector would be nothing like it is today, nothing. So these larger issues, I think, are the biggest thing you got to deal with there and in the places like Brazil and so forth. You have to first fix Sao Paulo. There are different parts of Sao Paulo that have different texts. Yeah, there you go. It's not only, last question, it was you had the last question. Thank you. My name is Mark Chocalingam. I am a FedEx alum as well. I used to work in Memphis for Raj 20 years ago, so. Good to see you. Thank you. I remember building international package volume models. So what do you see currently in terms of trends in package volume between Asia and US? The reason why I'm asking is, do you think this recession is a global recession or just a US recession? Well, I mean, obviously what's going on in Europe, I never thought I'd see in my adult life a kinetic war in Europe with tanks and things like that. It's just so horrifying. So I believe Europe is outperforming versus dire expectations. Yes. And I think the central part of that is Europe was much more deft or agile in replacing Russian oil and gas than Putin thought that they would be. So there's some, as you probably have seen, some signs of things are better than we thought they were gonna be. I think in the United States, we have a couple of really big things that are going on here that, again, are not very well commented on. The most important of which is we've become Europe and that work is now optional. I mean, what Europe did in the post-World War II Europe, particularly in the 80s and the 90s, is they disarmed and they used those government funds essentially for social services. We've not had that in the United States. We started creeping up on it in the mid-1990s and then Clinton famously moved to the center and changed a lot of the welfare criteria and so forth. But over the last, you know, in this century, many of our entitlement programs now require no work at all. And there is a very, very insightful book by Phil Graham and two other world-class economists called The Myth of American Inequality. And what it shows is, if you take the American economy, the population by quintiles, and remove taxes paid from the top fifth, and you take government transfers down on the bottom fifth, the inequality is much less than people talk about it because the news and the government, the statistics, they don't do those two things. It's just if you make $18,000 flip and hamburgers, that's your income. It doesn't take in the transfer payments you get for your total income. So with the American Recovery Plan of March, 2021, and during the pandemic, many, many programs, particularly food stamps, have now become no criteria whatsoever. I mean, hell, I might, you know, qualify for food stamps. I've never tried, but maybe I'll look into it, but all kidding aside, you understand what I mean. You've got the farmers and agriculture for it. You've got the folks that believe in universal basic income and that sort of thing. By the way, the two most quoted right wing economists of the 20th century, Hayek and Milton Friedman, both agreed that you should have some sort of negative income tax. They didn't call it that. I mean, a universal basic income, but it had to be based on work and Milton Friedman's approach was a negative income tax, which is kind of what we have today with the child or a fundable child credits and so forth. So our problem with inflation today and running an economy, a lot of the problems is simply we can't grow any faster because we don't have the blue collar labor that's willing to work. And the second thing I would commend to you is Nick Eberstadt's work. He's one of the great demographers. He was with American Enterprise Institute. He wrote a book called Men Without Work, and he recently updated it and now the updated version is called Work Without Men. But what he shows is there are millions and millions and millions of prime-age working males in the United States that don't work between the ages of 20 and 55. And what they're doing, and it's in his book, it's very scholarly and kind of, they're at home on screens. Now what the hell they're looking at? I don't know, but playing games, they don't work. And so I think the recession that we have is a reset of the pandemic payments. And it's hard for us to get out of it because Europe is not robust. China's had these lockdowns and the re-calibration of people on their supply chains. And then the United States has become, over the last few years, a social democracy, but hadn't really recognized it. And on top of that, we want to be the world's policeman. That's hard to do. So you got again, like we were talking about, you can't just take supply chains and business and the economy out from the macro policies. And the policies have done those things. And particularly now with Ukraine, I mean, we're, I mean, people can use all kinds of euphemism, we're in a war with the damn Russians. NATO is, we just don't have our NATO soldiers there, but putting these tanks as a profound move just happened yesterday, I believe. So I think that's what's going on. It's hard for us to get a real handle on it, but it's strictly, it's definitely had a very negative effect on world trade and on demand, particularly out of China and across the Pacific. Okay guys, thank you very much. And I'm gonna take any more questions. Okay. Good to see you. Okay, glad to do it.